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State to look into school's donations

11/19/2004 - Colorado Buffaloes

DENVER -- Faced with mounting questions about donations from private, outside fund-raising groups, the University of Colorado agreed Friday to work with the state auditor's office to review some of the transactions.

School officials also notified the NCAA that a private football booster group spent money on behalf of the athletic department in violation of NCAA rules.

"The university keenly understands its role as a steward of public money and public trust," CU president Elizabeth Hoffman said in a letter this week to lawmakers, business leaders and university employees.

In a statement, Hoffman said the state auditor will structure and direct an independent audit of transactions between the university and its private fund-raising arm, the CU Foundation.

Another audit by the state auditor's office will review deposits and spending by the Buffalo Technique School, a summer football camp run by head football coach Gary Barnett, university spokeswoman Michele Ames said.

"This was prompted by our desire to assure the people of Colorado that they can have confidence in the university and foundation's stewardship of funds," she said.

A corporation run by Barnett, called High Hopes 95 Inc., operates the camp under a contract with the university. CU had similar arrangements with previous coaches.

In a letter to the NCAA enforcement staff Friday, CU provost Phil DiStefano said an NCAA rule was violated when the booster group, Littleton-based Dear Old CU, spent money on behalf of the university without being subject to an audit.

DiStefano said the audit rule was triggered when the fund purchased equipment for the athletic department instead of making a financial donation.

He said athletic director Dick Tharp and a former assistant had discussed the rules with Michael Tanner, the fund's secretary-treasurer, but neither of the CU officials was aware of the audit rule at the time.

DiStefano said university auditors will review Dear Old CU records. He told the NCAA a review of at least two years of records revealed the group had made donations to the CU Foundation, the football camp, a memorial fund for a deceased assistant coach and for other purposes.

The review found no direct donations to student-athletes or anyone else, he said.

CU has appointed a liaison to the group to ensure compliance.

Dear Old CU contributed about $140,000 over the past five years to Barnett's football camps. The donations were used to supplement the salaries of CU coaches, run the football camp and buy clothing and equipment, according to the fund's tax returns.

Tanner and other group officials of the group did not immediately return a phone call.

Barnett has agreed to open his corporation's records to outside auditors, although he is not required to by law because the corporation is private. He has denied any wrongdoing.

Results of the audits of the football camp and of the transactions between CU and the CU Foundation are expected to be made public, Ames said.

"We believe that our financial controls are solid, but we understand that people continue to have questions," Ames said.

Foundation president and CEO Michael M. Byram said a summary of an independent audit covering January 2001 to February 2004 was presented to regents during a meeting in August. Copies of a three-page summary were recently released.

Questions about the outside groups' finances arose this week when the Rocky Mountain News published portions of a report from auditor Predovich & Co.

The newspaper said the audit report was presented to a grand jury that looked into allegations that CU's football recruiting program had used alcohol and sex to entice top prospects and that recruits or players had raped women.

The audit report said the university, the CU Foundation and the football camp had failed to produce all the documents subpoenaed, and it questioned numerous financial transactions.

Hoffman said she had been assured by a member of the special prosecution team, headed by the attorney general's office, that there were no concerns about the university's response to requests for information.

CU Foundation officials also said they had complied with all such requests and that internal audits had found only seven minor errors among large numbers of transactions worth millions of dollars.

The grand jury disbanded in August without handing down indictments in any of the alleged sexual assaults, but former recruiting aide Nathan Maxcey was indicted for allegedly hiring a prostitute and using his university-issued cell phone to call prostitutes. He has denied any wrongdoing.